By Our Reporter
The Smart Telecom controversy is no longer just a dispute over unpaid loans or telecom assets. It has grown into something much larger: a test of whether Nepal’s institutions can enforce the law consistently when billions of rupees, political influence and regulatory loopholes collide.
At one level, the case appears straightforward. Smart Telecom Pvt. Ltd. borrowed heavily from a consortium of banks led by Nepal Investment Mega Bank. The loans were secured against telecom infrastructure and equipment under Nepal’s Secured Transactions Act. When the company failed to repay its dues, the bank moved to recover the money through collateral auction, eventually accepting a Rs 4.60 billion bid from Ncell Axiata Limited.
Banks argue they simply followed the law. From their standpoint, the issue is about protecting depositors’ money. Loans are not private favors handed out from a banker’s family cupboard. They come from public deposits. Once collateral is legally pledged and registered, lenders are expected to recover dues when borrowers default. Supreme Court precedents have also strengthened banks’ first claim over secured assets. Viewed narrowly, that argument has legal weight. But the problem begins where the banking process collides with telecom regulation and public ownership concerns.
Smart Telecom’s operating license had already been revoked by the Nepal Telecommunications Authority (NTA) in April 2023. Under telecom laws and asset management rules, infrastructure belonging to a revoked telecom operator is supposed to come under regulatory control. The NTA insists the assets could not legally change hands without its oversight because telecom infrastructure is not just ordinary private property. It forms part of a strategic national communications network.
The CIB investigation is therefore not questioning whether banks can recover loans. It is investigating whether the auction process intentionally bypassed government authority and whether individuals manipulated the system to prevent state control over valuable infrastructure.
And this is where the case becomes politically explosive. Former communications minister and current Rastriya Swatantra Party lawmaker Jagadish Kharel has also come under public scrutiny over alleged links to the broader scandal. Reports and political chatter intensified after allegations surfaced regarding his possible role in facilitating decisions connected to the telecom dispute.
Soon after those discussions gained traction, Kharel quietly left for Switzerland in what critics describe as a hurried and unusually discreet visit. The trip has fueled further suspicion because investigators and political opponents believe part of the alleged illicit money may have been parked abroad, including in Swiss financial channels. Kharel has not been convicted of wrongdoing, but the optics are politically damaging and difficult to ignore. He, however, denied his involvement in the scam.
The timing alone has deepened public distrust. In Nepal, sudden foreign travel by politically connected figures during corruption controversies rarely helps calm speculation. People have seen this film too many times. The cast changes. The script barely does.
What makes the Smart Telecom case particularly important is the institutional confusion it exposes. Nepal’s laws governing banking security, telecom regulation and state oversight appear to operate in parallel rather than in coordination. One institution claims first legal right over collateral. Another claims regulatory ownership after license cancellation. Meanwhile, investigators are left trying to determine whether legitimate recovery crossed into organized fraud.
That legal grey zone creates fertile ground for manipulation. If banks cannot dispose collator, how can they pay back depositors’ money? If regulators can arbitrarily override secured banking rights after loans turn bad, confidence in Nepal’s financial system also suffers. Neither outcome is healthy.
The government now faces a responsibility larger than this single case. It must clarify the legal hierarchy between banking recovery rights and sectoral regulatory authority. Parliament should immediately review conflicting provisions in telecom, banking and secured transaction laws to prevent future overlap. Regulatory decisions involving strategic infrastructure should also require mandatory inter-agency review before auctions proceed.
At the same time, the investigation must move beyond symbolic arrests. If politically connected individuals influenced the process, authorities should follow financial trails aggressively, including international cooperation where necessary. Selective accountability would only deepen the perception that powerful actors remain insulated while lower-level operators take the fall.
Nepal’s institutions often fail not because laws do not exist, but because too many people believe those laws become negotiable once enough money and influence enter the room. The Smart Telecom case now sits at the centre of that national frustration.
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